A Matter of Expectations

Mid-week market update: This week is full of market moving news. Not only have investors seen news on tariffs, the FOMC announced its interest rate decision today, and several major Magnificent Seven stocks are reporting earnings results. As a consequence, it's been difficult to make specific forecasts of market direction owing to the binary nature of the reaction to news.

 

From a technical perspective, concerning conditions are starting to appear. The S&P 500 ended a brief upper Bollinger Band ride and it's starting to consolidate sideways again. Both the 5 and 14 day RSI are recycling from overbought to neutral, which are tactical sell signals. Moreover, the VVIX, or the volatility of the VIX Index, is testing the psychologically important 100 level that often marks transitions to higher volatility and higher risk regimes.

 

Let's consider how the market reacted to events. 

The full post can be found here.

Fresh Highs = Bullish Tape

Preface: Explaining our market timing models 

We maintain several market timing models, each with differing time horizons. The "Ultimate Market Timing Model" is a long-term market timing model based on the research outlined in our post, Building the ultimate market timing model. This model tends to generate only a handful of signals each decade.

The Trend Asset Allocation Model is an asset allocation model that applies trend-following principles based on the inputs of global stock and commodity prices. This model has a shorter time horizon and tends to turn over about 4-6 times a year. The performance and full details of a model portfolio based on the out-of-sample signals of the Trend Model can be found here.

   

My inner trader uses a trading model, which is a blend of price momentum (is the Trend Model becoming more bullish, or bearish?) and overbought/oversold extremes (don't buy if the trend is overbought, and vice versa). Subscribers receive real-time alerts of model changes, and a hypothetical trading record of the email alerts is updated weekly here. The hypothetical trading record of the trading model of the real-time alerts that began in March 2016 is shown below.

 

The latest signals of each model are as follows:

• Ultimate market timing model: Buy equities (Last changed from “sell” on 28-Jul-2023)*
• Trend Model signal: Bullish (Last changed from “bearish” on 27-Jun-2025)*
• Trading model: Bullish (Last changed from “neutral” on 10-Jul-2025)*

* The performance chart and model readings have been delayed by a week out of respect to our paying subscribers.

Update schedule: I generally update model readings on my site on weekends. I am also on X/Twitter at @humblestudent and on BlueSky at @humblestudent.bsky.social. Subscribers receive real-time alerts of trading model changes, and a hypothetical trading record of those email alerts is shown here.

Subscribers can access the latest signal in real time here.

 

A Bullish Breakout

It is said that there is nothing more bullish than an all-time high. The S&P 500 achieved that feat last week when it staged an upside breakout to a fresh high after making a panic V-shaped bottom in April. The 14-week RSI is not overbought, indicating further potential upside. The equal-weighted S&P 500 also made a marginal closing high for the week.

 

While I see some nervousness among traders, there is no denying that this is a bull market. Don’t fight the tape.
 

The full post can be found here.

 

Special announcement: Humble Student of the Markets will cease publication on March 31, 2026. See this announcement for more details and updates.    

Tariffs: Bark Worse Than Bite?

Q2 earnings season was supposed to be a key test of how the Trump tariffs would affect corporate earnings and margins. The coming week will see the bulk of the S&P 500 by weight report results. So far, the preliminary verdict has been relatively benign. Negative effects from tariffs seem to be the exception rather than the rule. Is the tariff’s bark worse than its bite?

The full post can be found here.

 

Special announcement: Humble Student of the Markets will cease publication on March 31, 2026. See this announcement for more details and updates.   

 

A (Tentative) Upside Breakout

Mid=week market update: One key development that I had been monitoring is the upside or downside resolution of the sideways consolidation that often occurs after the market ends an upper Bollinger Band ride. Investors may have a tentative answer. It's an upside breakout.

 

The S&P 500 and equal-weighted S&P 500 finally staged an upside breakout from their consolidation ranges today. The NASDAQ 100 already broke out last week, and it pulled back to successfully test the resistance-turned-support level.

 

 

I call it a tentative breakout because much depends on the market reaction to the earnings reports of heavyweights Alphabet and Tesla after the close today.

 

The full post can be found here.

 

 

Special announcement: Humble Student of the Markets will cease publication on March 31, 2026. See this announcement for more details and updates.   

 

The Dog that Didn't Bark

Preface: Explaining our market timing models 

We maintain several market timing models, each with differing time horizons. The "Ultimate Market Timing Model" is a long-term market timing model based on the research outlined in our post, Building the ultimate market timing model. This model tends to generate only a handful of signals each decade.

The Trend Asset Allocation Model is an asset allocation model that applies trend-following principles based on the inputs of global stock and commodity prices. This model has a shorter time horizon and tends to turn over about 4-6 times a year. The performance and full details of a model portfolio based on the out-of-sample signals of the Trend Model can be found here.

   

My inner trader uses a trading model, which is a blend of price momentum (is the Trend Model becoming more bullish, or bearish?) and overbought/oversold extremes (don't buy if the trend is overbought, and vice versa). Subscribers receive real-time alerts of model changes, and a hypothetical trading record of the email alerts is updated weekly here. The hypothetical trading record of the trading model of the real-time alerts that began in March 2016 is shown below.

 

The latest signals of each model are as follows:

• Ultimate market timing model: Buy equities (Last changed from “sell” on 28-Jul-2023)*
• Trend Model signal: Bullish (Last changed from “bearish” on 27-Jun-2025)*
• Trading model: Bullish (Last changed from “neutral” on 10-Jul-2025)*

* The performance chart and model readings have been delayed by a week out of respect to our paying subscribers.

Update schedule: I generally update model readings on my site on weekends. I am also on X/Twitter at @humblestudent and on BlueSky at @humblestudent.bsky.social. Subscribers receive real-time alerts of trading model changes, and a hypothetical trading record of those email alerts is shown here.

Subscribers can access the latest signal in real time here.

 

 

A Speculative Buying Stampede

You can tell a lot about the character of market psychology by the way it responds to news. In the past week, the stock market has faced the challenge of unexpected tariff levels of 30% on Mexico and the European Union, higher-than-expected levels of tariff pass-through in the CPI report  and a Trump trial balloon to fire Fed Chair Powell for cause. In the end, the S&P 500 rose on the week.

The rally off the April bottom is characterized by a FOMO stampede of low-quality stocks. The accompanying chart illustrates the degree of speculation. Bitcoin has surged to an all-time high, and the relative performance of ARK Investment ETF (ARKK) rose sharply to a new recovery high. It all looks very frothy.

The signature moment in the Sherlock Holmes tale, “The Adventure of Silver Blaze”, was the dog that didn’t bark. Holmes deduced that a guard dog didn’t bark because he was approached by someone he knew. Similarly, the latest seemingly frothy advance is showing few signs of speculative excess, indicating further upside potential. 

 The full post can be found here.

 

 

Special announcement: Humble Student of the Markets will cease publication on March 31, 2026. See this announcement for more details and updates.   

 

The Trade War is dead! Long Live the Trade War!

The market is hiding a secret in plain sight. Ever since the “Liberation Day” reciprocal tariff panic, trade war tensions have been in retreat, and the S&P 500 has regained all of its losses and achieved fresh all-time highs. This has happened against a backdrop of continuing uncertainty over tariff levels imposed by the U.S. on its trading partners. The question is why.

That’s because despite all of the dire headlines about the imposition of a 25% tariff rate on Canada and 30% on Mexico and the European Union, the only trade war that matters is effectively over. China has won, and the stock market is rallying in relief.

 

The full post can be found here.

 

 

 

Special announcement: Humble Student of the Markets will cease publication on March 31, 2026. See this announcement for more details and updates.   

 

A Resilient Stock Market

Mid-week market update: It's remarkable how resilient the stock market has been in light of the challenges it's facing. The S&P 500 ended an upper Bollinger Band ride last week and it's been consolidating sideways. The newsflow has been mostly negative, and stock prices have been given lots of opportunity to retreat but the index remains in a narrow trading range, all while the percentage of S&P 500 above their 20 dma has retreated from overbought levels to neutral.

 

The full post can be found here.

 

 

 

Special announcement: Humble Student of the Markets will cease publication on March 31, 2026. See this announcement for more details and updates.   

The Bullish Elephant in the Room

Preface: Explaining our market timing models 

We maintain several market timing models, each with differing time horizons. The "Ultimate Market Timing Model" is a long-term market timing model based on the research outlined in our post, Building the ultimate market timing model. This model tends to generate only a handful of signals each decade.

The Trend Asset Allocation Model is an asset allocation model that applies trend-following principles based on the inputs of global stock and commodity prices. This model has a shorter time horizon and tends to turn over about 4-6 times a year. The performance and full details of a model portfolio based on the out-of-sample signals of the Trend Model can be found here.

   

My inner trader uses a trading model, which is a blend of price momentum (is the Trend Model becoming more bullish, or bearish?) and overbought/oversold extremes (don't buy if the trend is overbought, and vice versa). Subscribers receive real-time alerts of model changes, and a hypothetical trading record of the email alerts is updated weekly here. The hypothetical trading record of the trading model of the real-time alerts that began in March 2016 is shown below.

 

 

The latest signals of each model are as follows:

• Ultimate market timing model: Buy equities (Last changed from “sell” on 28-Jul-2023)*
• Trend Model signal: Bullish (Last changed from “bearish” on 27-Jun-2025)*
• Trading model: Neutral (Last changed from “bullish” on 14-Apr-2025)*

* The performance chart and model readings have been delayed by a week out of respect to our paying subscribers.

Update schedule: I generally update model readings on my site on weekends. I am also on X/Twitter at @humblestudent and on BlueSky at @humblestudent.bsky.social. Subscribers receive real-time alerts of trading model changes, and a hypothetical trading record of those email alerts is shown here.

Subscribers can access the latest signal in real time here.

 

 

Bullish Tripwires

I've been fairly cautious on equities in the past few weeks, but that’s changing. There is a bullish elephant in the room that is becoming evident and can’t be ignored.

Two weeks ago, I outlined the bull case for stocks, which was characterized as having the odds of one in three or four (see Buy the Cannons: Exploring the Bull Case). At the time, I set out three bullish tripwires, all of which have been triggered. 

The small-cap Russell 2000 was tracing out an inverse head and shoulders pattern and it was unclear at the time whether it would stage a breakout above the neckline. The Russell 2000 has decisively broken out.
My long-term timing model was on the verge of a buy signal based on the MACD crossover of the NYSE Composite from negative to positive. That signal was triggered and it has extensively discussed in these pages.

 
The final trigger was a broad improvement in breadth. The S&P 500 and the NYSE Advance-Decline lines had broken out to all-time highs, but net 52-week highs-lows hadn’t made a new 2025 high. Fast forward to today, that indicator (bottom panel) made a 2025 high last week, and the mid-cap S&P 400 A-D Line also broke out to a new high. The only shoe left to drop is the small-cap S&P 600 A-D Line, which is lagging and yet to make an all-time high. At this rate, that’s only a matter of time.

The full post can be found here.

 

 

Special announcement: Humble Student of the Markets will cease publication on March 31, 2026. See this announcement for more details and updates.   

An Update on Gold: Time for a Pause?

I have been bullish on gold for several months (see 2025 High Conviction Idea: Gold). Since that report was published, gold prices have risen over 25% in USD. More recently, it violated its rising trend line in all major currencies except the Japanese yen, which may be a technical warning of a tiring bull. Is it time to take profits in the gold bull trade?

 

The full post can be found here.

 

 

Special announcement: Humble Student of the Markets will cease publication on March 31, 2026. See this announcement for more details and updates.  

Tariff Man Returns

Mid-week market update: Investors have seen this movie before, which I described as a Trump collar. As the accompanying chart of the trade war factor, Trump shown a pain point at which the market anxiety, as measured by the VIX and MOVE Index, rises enough that he moderates his course on tariff belligerence. As market anxiety cools down, and he makes some gains to score political capital, the Tariff Man emerges and he asserts his "Art of the Deal" persona. In the wake of the trade deal with Vietnam and the passage of the tax bill, we are back in the Tariff Man zone.

 

 

In effect, he is financing the Trump TACO Put with the sale of a Trump Tariff Man Call option on risk assets. It's therefore not a surprise that the market is pausing its gains this week.

The full post can be found here.

 

Special announcement: Humble Student of the Markets will cease publication on March 31, 2026. See this announcement for more details and updates.      

Should You Embrace the Melt-up?

Preface: Explaining our market timing models 

We maintain several market timing models, each with differing time horizons. The "Ultimate Market Timing Model" is a long-term market timing model based on the research outlined in our post, Building the ultimate market timing model. This model tends to generate only a handful of signals each decade.

The Trend Asset Allocation Model is an asset allocation model that applies trend-following principles based on the inputs of global stock and commodity prices. This model has a shorter time horizon and tends to turn over about 4-6 times a year. The performance and full details of a model portfolio based on the out-of-sample signals of the Trend Model can be found here.

   

My inner trader uses a trading model, which is a blend of price momentum (is the Trend Model becoming more bullish, or bearish?) and overbought/oversold extremes (don't buy if the trend is overbought, and vice versa). Subscribers receive real-time alerts of model changes, and a hypothetical trading record of the email alerts is updated weekly here. The hypothetical trading record of the trading model of the real-time alerts that began in March 2016 is shown below.

The latest signals of each model are as follows:

• Ultimate market timing model: Buy equities (Last changed from “sell” on 28-Jul-2023)*
• Trend Model signal: Bullish (Last changed from “bearish” on 27-Jun-2025)*
• Trading model: Neutral (Last changed from “bullish” on 14-Apr-2025)*

* The performance chart and model readings have been delayed by a week out of respect to our paying subscribers.

Update schedule: I generally update model readings on my site on weekends. I am also on X/Twitter at @humblestudent and on BlueSky at @humblestudent.bsky.social. Subscribers receive real-time alerts of trading model changes, and a hypothetical trading record of those email alerts is shown here.

Subscribers can access the latest signal in real time here.

 

The Return of Irrational Exuberance 

I pointed out last week that animal spirits were returning to the market. Perhaps too much. A recent Bloomberg article, “‘Irrational Exuberance’ Stock Gauge Sparks Fresh Bubble Worries”, tells the story of extremely greedy sentiment creeping into the markets. The Barclays Equity Euphoria Indicator has reached dangerous levels of froth: 

The bank noted that the measure, which is calculated from derivatives metrics, volatility technicals and sentiment signals inferred from options markets, has historically averaged around 7%, but occasionally it peaks above 10% as during the Dotcom era of the late 1990s, and the meme-stock frenzy of 2021. The gauge currently sits around 10.7%, data compiled by Barclays show.
 

Market conditions are becoming bubbly and melting up. 

At the moment, the S&P 500 is a little extended while grinding out new highs and it’s on an upper Bollinger Band ride. Should traders embrace or fade the melt-up?

The full post can be found here.

 

Special announcement: Humble Student of the Markets will cease publication on March 31, 2026. See this announcement for more details and updates.     

Can a New Bull Begin at a Forward P/E of 22?

It’s official, my long-term market timing model has confirmed a buy signal at the end of June. It first flashed a sell signal in late January when the 14-month RSI of the NYSE Composite exhibited a negative divergence when the market made a new high, but RSI didn’t. Now it flashed a buy signal at the end of June when MACD recycled from negative to positive (bottom panel), though you have to squint to see when it went negative in May.

This model has shown a strong track record over the years. If you had sold in late January and bought back in when the S&P 500 made a new high last week, you would have missed the tariff drama drawdowns of the last few months.

 
In my discussions with investors, one key question keeps coming up. The S&P 500 is trading at a forward P/E of 22. Can a new bull truly begin at such elevated valuations?

The full post can be found here.

 

Special announcement: Humble Student of the Markets will cease publication on March 31, 2026. See this announcement for more details and updates.    

 

Broadening Breadth?

Mid-week market update: I suggested on the weekend that the animal spirits were back. Indeed, the market may be undergoing a broadening in breadth and leadership. NASDAQ 100 stocks are coming off the boil, and med- and small-cap stocks are showing signs of life. That's a welcome short-term sign that this rally may have more room to run.

 

The full post can be found here.

 

 

Special announcement: Humble Student of the Markets will cease publication on March 31, 2026. See this announcement for more details and updates.